The enactment of Law no. 17/2014 on certain regulatory measures regarding the sale and purchase of agricultural land located outside city limits (“Law 17/2014”) has given rise to and continues to give rise to numerous comments referring both to certain specific provisions and to the method of implementing the provisions of the Law. Unfortunately, the practical consequence is the deadlock concerning transactions with agricultural land located outside city limits. Currently, the Methodological norms for applying the Law are yet to be published, although the time-limit for their publication was long ago exceeded.
As a matter of course and in compliance with the transitional provisions of Law 17/2014, during this entire timeframe, the statutory rules set out by the Civil Code should have been applied to transactions with agricultural land located outside city limits. Nevertheless, in practice, municipalities refuse to issue the required documentation in relation to a potential sale, while notaries public refuse to authenticate preliminary agreements, promises of sale and purchase, on the ground that the Methodological Norms have not been approved yet.
Law 17/2014 mainly regulates a preemptive right in relation to price and under equal conditions for the sale of agricultural lands located outside city limits in favor of: (i) co-owners, (ii) land tenants, (iii) neighboring owners and (iv) the Romanian state by the Agency of State Domains. It is important to note that such preemption also applies to Romanian legal entities.
The procedure for exercising the preemptive right sets out the seller’s obligation to register with the City Hall where the land is located, an application requiring the publication of the offer of sale for the land. The holders of the preemptive right have 30 days to manifest their intention to purchase such land.
If the holders of the preemptive right manifest their intention to purchase the land, the seller will sell the land to the one holding priority. If no interest is manifested by the beneficiaries of the preemptive right, the land may be sold to another purchaser under the terms included in the published offer.
Law 17/2014 also sets forth specific regulations and additional requirements for certain types of lands, i.e. approval of the Ministry of National Defense for disposing of certain lands, the approval of the Ministry of Culture for areas with archaeological sites, areas with sighted archaeological patrimony or with incidentally discovered archaeological potential.
Law 17/2014 has given rise to debates and it is most likely to continue to create controversies given certain provisions:
Land Book “certificate” vs. Land Book “excerpt”:
- within the meaning and for the purpose used by the lawmaker, is the Land Book “certificate” synonymous with Land Book “excerpt”? The Draft Methodological Norms make no reference to this certificate, but only to the land book excerpt.
- what should be the legal value of the Land Book certificate given that registrations in the Land Book do not have an effect constitutive of rights yet? According to the statutory provisions applicable at this time, Land Book registrations are made for the purposes of ensuring the enforceability of legal acts and deeds, thus, having limited effect as concerns proof of the existence/validity of the right to which it refers.
Overbidding the legal effects of the Land Book Certificate which “fully” proves the alleged owner’s good faith
The Land Book certificate “fully proves the good faith” of both the parties to the contract and of the “attesting professional” (notary public, land book registrar).
The presumption of good faith thus instituted intervenes as a derogation from the provisions of the Civil Code as concerns the acquiring in good faith of a right registered in the land register, seemingly operating as a limitation thereof. In addition, Law 17/2014 institutes the presumption of good faith in relation to a wider scope of legal operations, encompassing all agreements of transfer and not only agreements on the sale and purchase of agricultural lands located outside city limits, according to the scope of the Law.
Excessiveness of the sanction of absolute nullity for the non-compliance with the provisions of Law 17/2014 referring to the exercise of the preemptive right
Transfer of agricultural lands located outside city limits in breach of the legal conditions (preemptors’ right, required approvals) leads to the sanction of absolute nullity. This sanction appears excessive and the practical consequence will translate into a more difficult performance of transactions.
Disproportion between the jurisdiction of the Land Book registrar and that of courts of law in the case of registrations in the Land Book performed pursuant to a court decision replacing an agreement
The Land Book registrar will be able to reject an application for registration in the Land Book of an ownership title established pursuant to a court decision, if the conditions set out by the Law are not met. Beyond the generic nature of this provision, the Land Book registrar’s opportunity to exercise control and censorship over a court decision is a regulatory error.
There are other matters as well which require additional clarifications, the attention being directed at this time to the Methodological Norms. The adoption and publication of such norms as quickly as possible is essential for the clarification of all aspects which gave rise not only to debates concerning such legal provisions, but also to real practical problems, which, at least at the current time, harm the civil circulation of these lands.
Given the interest for agricultural investments, however, taking into account the fact that transactions with agricultural lands are at any rate hindered by the significant delay in the performance at national level of the cadastral operations and the land book registration operations, the enactment of Law 17/2014 makes things even more difficult.